How Smart Risks In Ad Tech Can Yield Big Rewards

“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Damian Garbaccio, global chief revenue officer at eXelate.

Innovation is a concept often referenced rather liberally in the advertising technology space.

However, a vast majority of industry players that tout their focus on innovation simply adopt the technologies and practices previously brought to fruition by a small group of true innovators. They are the ones who actually laid it on the line in pursuit of something truly new that could make a difference to the industry.

Innovations don’t happen without risk. Challenging the status quo in a billion-dollar industry is a huge risk in and of itself, but truly disruptive companies operate under the general philosophy that the potential rewards are worth the risk. What separates the doers from the dreamers is how readily they take the smart risks now in order to assure future success.

Consider the recent emergence, for example, of mobile-only technology companies like mParticle and Localytics. Even two years ago, many couldn’t conceive a mobile-only business. That means these companies had to not only take the risk of pioneering an unexplored space, they had to do so within the constantly shifting mobile market while also singlehandedly educating the industry about an entirely new offering.

Currently, millions of disparate apps and software development kits provide mobile data, requiring the assistance of multiple content providers to make sense of it all. Noting the lack of an infrastructure to help guide data use, mParticle took on the daunting task of creating a solution that integrates various sources’ mobile data assets, essentially becoming the infrastructure for parsing vast amounts of mobile data. This leap of faith, coupled with a focus on the market’s real need for true innovation, paid off, and mParticle now successfully helps clients improve stability and security through their framework for managing their mobile data partnerships.

At the same time, brands are marketing to a “multi-platform majority.” That’s comScore’s term for the US consumer population, more than half of which now accesses digital content on both desktop and mobile devices. But mobile content consumption can only continue to grow and, given the fact that display is shrinking significantly in the face of banner blindness and the rise of mobile-only users, it will only be a matter of time before mobile advertising overtakes other channels. Therefore, abandoning display entirely and focusing on the long-term rewards of going strictly mobile could pay off in a big way.

Then, there is another legacy technology – television – that is beginning to lose its 800-pound gorilla status, thanks to emerging technology. TV has always been where the big advertising money is, and that is still a fact. With more consumers getting their content online and on mobile devices, however, the TV advertising market is taking a hit. Enter companies like placemedia and Simulmedia, which are leveraging what we’ve worked so hard to perfect in digital – data, analytics, programmatic – and applying it to TV. They have the opportunity to not only change the game in terms of innovation, but also in relation to their revenue growth potential.

Placemedia’s targeting platform, for instance, leverages millions of demographic and behavioral data points overlaid with set-top box data from more than 14 million households. In the fourth quarter of 2013, a prominent online retailer tapped the company to develop an impression-based, audience-targeted media plan to reach married couples between 46 and 65 years of age, with school-age children, who owned a home and had an upper middle income level.

Since placemedia could bridge the gap between online and offline television data, the retail client benefited from an unprecedented level of targeting via its platform – reaching a target audience index of 143 – while taking advantage of TV’s undisputed brand-building power. This kind of cross-channel targeting and reach was unheard of five years ago without high CPMs. But companies like placemedia constructed a platform that significantly changed the digital advertising game.

These are just a few examples of companies that make smart bets on the unknown so that they can be on the frontlines when the market catches up. Too often, because they fear losing business or risking revenue, companies either default to legacy methods or wait around until a new technology sees enough adoption that there is little to no risk involved before they jump on the bandwagon.

Risk avoidance cannot be relied upon as a business strategy, nor does it offer any possibility of achieving a greater scale. When everyone “innovates” using the same bag of tricks, no one pushes the envelope or pursues a goal that will drive the next great evolution of digital advertising.

Treading water will certainly keep you afloat, but eventually, those that risk swimming through dangerous waters to take first place will leave you behind.